The "cylinder type thing" mounted on the TB is the AIC or "Air Idle Controller". The TPS is a small relatively flat black piece of plastic (with wires coming out of it) mounted to the TB on the opposite side of the TB to the throttle linkage.
I wouldn't worry so much about the motor being stolen, as Tom pointed out, it is would be extremely difficult to determine that anyway. I would have the engine checked out by a competent mechanic by doing a compression test and maybe an emissions sniff if that is required where you live. Beyond that, check the car out for cancer in the typical places, floor boards, rear wheel wells, bottom of the front fenders behind the front wheels, the "pocket" between the strut towers and the firewall and the floor of the trunk. There may be other areas to look at, but those seem to be the most common. $1,000 isn't a heck of a lot and if the car is relatively rust free, is a decent price.
No Tom, .040 isn't too much really, I just said that it was not a standard overbore. However, it does put the bore closer to the maximum relatively safe overbore of .060. Any overbore over .030 should be done ONLY after the block is sonic checked due to the potential core shift.
40 over seems like a lot to me. .030 over is a standard overbore bringing the displacement up to 306. There must have been a reason that a .040 overbore was necessary.
The difference between a 14# and a 15# injector isn't great enough to cause you ANY problems with the enviro-puppiess. When it comes to emissions you just have to use your head and think about it. The 5.0 "HO" was available in 1986 and would likewise have had to pass emissions as well, but the story doesn't end there. There were also 5.8 liters(351W) and 460's that had to pass the emissions standards in effect that year. So long as your engine is not so worn out that it can't pass no matter how careful you are AND the other emissions equipment is in good working order (air pump, cat, egr, pcv, etc) and can pass visually, you can do almost anything. One last note, in most states, after the car is 25 years old, it is an official antique and only has to pass the visual inspection, if at all. As noted by Vinnie, Oklahoma, Texas and Tennessee are among a growing number of states that have eliminated emissions testing completely OR have chosen to only test in certain areas. Arizona seems to be in the latter category in that only vehicles registered within the Pheonix and Tuscon Metro areas are required to be tested.
The information I relied on for the Arizona emissions program can be found here.
We can't assume that there is ONLY a single problem. Tom indicated that the fuel pump was the cause of the running poorly problem, but a failed pump wouldn't cause the ALT idiot light to remain illuminated with the key out, nor would it cause intermittent clock. With the history of the fox bodies, I would look into the ignition switch and the associated wiring harness.
When you say smooth, do you mean to say that someone refinished it by sanding and then painting it, since I believe that it is made from cast aluminum? If so, you might consider masking your coin tray (the inner recessed coin part) and using 400-800 grit wet/dry sand paper, wet sand the "grain" surround to be smooth. I believe that piece is molded dark gray plastic and if you take your time, the results would be acceptable.
It looks really good, great job! Are you gonna semi-finish the garage with drywall? It would make the space much nicer, giving you the opportunity to run necessary wiring ,insulate making the space more comfortable to work in year around and lastly make the space brighter, rather than having the tar paper suck up the light sources.
